Five ways organisations can improve gender pay parity

This year’s UN Women’s theme for International Women’s Day – “Invest in women: accelerate progress” - refocuses attention on the gender pay gap (GPG). In this blog post, I reflect on past and current research undertaken with colleagues at Leeds University Business School, in relation to issues of pay, pay progression and the advancement of gender equality.  

The GPG is a global and systemic challenge. It is visible to varying degrees in all sectors of the economy. Here, I provide five insights and recommendations that organisations may wish to consider when thinking about the challenge of reducing their organisational gender pay gap and promoting greater gender equality.  

1. Use starting pay as an opportunity to get gender equity in pay right. 

Often, pay on entry to an organisation is heavily based on past pay and could reinforce past pay inequality. Evidence-based research indicates that when setting entry pay, there should be robust checks for pay parity (paying employees in the same job and location fairly, relative to one another, regardless of their gender, race, sexuality, age or nationality) when multiple employees are hired together, as might happen with a graduate intake.  

Where there is past employment, do not rely heavily on previous salary as a proxy for suitable entry pay, otherwise an organisation may simply reinforce and continue the low/er pay women may have previously experienced in other companies.  
 
Inequity at the start of employment can have significant implications for motivation, relationships, and trust. Inequity in pay will shape an employee’s organisational commitment. 
 
Pay should reflect an evaluation of the role, skill requirements and responsibilities of the job; past pay might not be a good indicator of what someone should be paid in their new role.  

2. Make sure that role progression and pay progression are in step.  

Data analysis in one of our recent studies on gender, pay and progression in a male-dominated industry revealed women progress at a good rate compared to their male peers. However, in contrast, women did not experience as much pay progression in the study period (five years) - overall, men’s pay progressed more.  
 
In that study, we recommended that if a colleague is asked to take on more responsibilities in a role for an extended time period, sees their role expanded, or is promoted, this should trigger a pay review: they could be awarded a one-off payment (if new duties are time bound) or pay uplift (if the change is permanent) as deemed appropriate by HR and their line manager.  

3. Set specific Key Performance Indicators (KPIs) around the gender pay gap. 

Organisations now routinely have KPIs on Equality, Diversity and Inclusion (EDI) related performance and targets such as the proportion of women in leadership roles or for graduate recruitment. Less frequently do we see or hear about ones on pay equity or closing the GPG.  
 
Closer scrutiny of GPG within different areas of business and/or functions within any given organisation can help with sharing responsibility for pay equity and problem-solving, focusing managers’ minds on the matter in a more collective way. Introducing specific KPIs on gender pay gaps emphasises the importance of this matter widely. Setting KPIs on pay can also make gender pay gap data visible, and support managers to make informed decisions about pay equity and transparency.  

4. Review your process for allocating bonuses and evaluation of performance. 

Bonus payments are a major factor in organisational GPGs and this is particularly true in sectors such as finance and professional services where bonuses make up a larger proportion of pay. This is why we sometimes see larger gender pay gaps in these types of organisations, despite women being highly qualified and comprising a large proportion of professional staff. The level of discretionary awards is currently at a nine year high.  

5. Do not rely solely on wider EDI interventions to reduce your organisation’s gender pay gap.  

GPGs are quite distinctive requiring evidence-based and targeted intervention to succeed. Too many organisations have misaligned objectives, assuming that work connecting broader EDI objectives, notably inclusion at work, can also have a positive impact on reducing GPGs.  
 
A growing body of research, including that of two of our past doctoral students, Dr Cheryl Hurst and Dr Jack Daly, who now work on EDI in industry and academia respectively, contribute to this argument on misalignment of generic EDI interventions with more defined gender equality goals. 
 
Targeted interventions based on evidence-based research are foundation to understanding how to tackle something as complex as the GPG. Influential studies also show that engaging leadership and managers in problem-solving, and resourcing of EDI work are important if initiatives are to be sustained and successful. This latter insight we have reinforced in our work with National Highways, in which we explore how EDI can enhance supply chain performance and other organisations in range of sectors. We will be sharing our findings from this project in more detail later in 2024.